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Author: donolson Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 121114  
Subject: variable life annuity Date: 9/27/1998 10:18 AM
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I am planning on dumping a variable life contract (asap) in favor of a term coverage/invest the difference strategy. Can I roll the dough in this plan over into a Roth IRA similar to a traditional IRA rollover to get the one time tax benefit? The insurance "product" of course used after-tax money that grew tax-deferred which is different than the IRA situation. Are there any rules here? I'd like to have some information of my own before I work this out with my agent. Thanks Fools!
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Author: TMFTaxes Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 5541 of 121114
Subject: Re: variable life annuity Date: 9/28/1998 11:50 PM
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[[I am planning on dumping a variable life contract (asap) in favor of a term coverage/invest the
difference strategy. Can I roll the dough in this plan over into a Roth IRA similar to a traditional IRA
rollover to get the one time tax benefit? ]]

First of all, you didn't mention if the current variable life contract is currently in any IRA or other tax deferred account. If it is, the answer may be yes, and you can make the conversion to a Roth. But, based upon the tone of your question, it sounds like the policy is NOT currently in any tax deferred account...in which case the answer would be no: you could not convert it to a Roth IRA.

[[The insurance "product" of course used after-tax money
that grew tax-deferred which is different than the IRA situation. Are there any rules here?]]

Obviously I should have continued reading the question. Since the policy was purchased with after tax funds, the answer is definitely no...you can't make a Roth IRA conversion.

[[ I'd like to
have some information of my own before I work this out with my agent.]]

I wish I could give you more hope, but without the policy currently being in a tax deferred vehicle (such as an IRA account), the conversion to a Roth IRA would not be allowed. Sorry.

TMF Taxes
Roy

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